Daily Market Commentary: Weakening Rallies

A little early for this update as I recover from jet-lag.  The market isn't much different to where I last left it at the start of July. The key difference is each rally peak is become more shallow as swing lows ascend; this squeeze will eventually break - most likely to the downside.

Weakness in the S&P is also showing itself in a squeeze in technical strength; the bearish cross in +DI/-DI and On-Balance-Volume with a pending 'sell' in the MACD suggest the June rally is about to come to an end.

Selling is harder in the Nasdaq as the most recent swing high was below the prior peak; the MACD is also on a 'sell' trigger as the index (so far) successfully defends the 50-day MA.  There was also a rebuttal off horizontal resistance just below 3,000.

Nasdaq Breadth has also taken a hit as the Percentage of Nasdaq Stocks above their 50-day MA drops.

The smoother moving Summation Index is also in the process of rolling over in favour of Bears.

The Small Caps has taken weakness a step further by posting both a lower swing high and swing low. The converged 50-day and 200-day MAs are providing a last line of defense for Bulls.

Long-side opportunities are thin on the ground, but some may look to the semiconductor index to post a double bottom; a push above 390 is required to confirm. Bottom fishers may look to acquiring some around the 350 mark.

A busy week lies ahead for the markets...

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Dr. Declan Fallon is the Senior Market Technician and Community Director for Zignals.com. I offer a range of stock trading strategies for global markets which can be Previewed for Free with delayed trade signals. You can also view the top-10 best trading strategies for the US, UK, Europe and Rest-of-the-World in the Trading Strategy Marketplace Leaderboard. The Leaderboard also supports advanced search capability so you can tailor your strategies to suit your individual requirements.

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